JOHANNESBURG (miningweekly.com) – Fitch group company BMI has lowered its forecast for Russian nickel production in 2017, and says the outlook for the country’s domestic production over the next five years looks bleak.

BMI stated this week that Russia’s nickel production would remain on a negative trend this year, following a contraction of 4.8% year-on-year in 2016, citing ongoing operational challenges at Norilsk Nickel mines, which account for more than 80% of domestic output.

“We have revised down our previous forecast of 1% average nickel production growth this year to a decrease of 5%, meaning absolute production in the country will drop from 256 000 t in 2016 to 243 000 t in 2017,” the company said.

BMI said that Norilsk Nickel was underperforming, pointing to the first half-year results, which were released on Monday. The world’s largest nickel producer’s consolidated nickel production amounted to 103 000 t, which was a 15% year-on-year decrease, while production from Russian operations totalled 98 000 t, a 1% year-on-year decrease. The weaker performance is the result of the closing of a nickel plant in Norilsk Nickel’s polar division in late 2016, which led to an increase in work-in-progress material.

Russia’s other major producer, OAO Ufaleynickel stopped production indefinitely in April, owing to financial losses as a result of persistently low nickel prices in the last few years and long-term debt.